A lawyer who allegedly stole confidential information from his former workplace and set out to establish a rival firm has failed in his bid to add to his defence, including a claim that a supposed “side agreement” tainted the employment agreement “with illegality”.
Justice Michael Ball of the NSW Supreme Court has dismissed Justin Carroll’s application to file an amended defence to BlackBay Lawyer’s claims that he established a rival legal practice, stole confidential information, and solicited clients to move with him.
The boutique litigation and disputes firm has sued Carroll and Yianni van Gelder for the return of information and the delivery of computers, phones and electronic devices for forensic analysis.
In addition to a restraint against them approaching anyone who was a client up until mid-February 2025, BlackBay is seeking an order to prevent Carroll and van Gelder from enticing the firm’s directors, senior employees or contractors into leaving with them.
In a notice of motion to amend his defence, Carroll sought to plead the existence of an alleged “side agreement”, which restricted him from enforcing statutory entitlements such as annual leave, sick leave, and remuneration only by reference to a share of the professional fees he billed on matters and that BlackBay collected.
He claimed this side agreement was illegal and void because it was entered into as a “pre-condition” to the employment agreement, meaning that it then became “tainted with … illegality”.
Carroll has also alleged that the side agreement was amended in December 2023 to include a “speculative agreement”, in which the terms of his remuneration were altered in cases where Carroll agreed to take on “no win/no fee” matters for the firm.
He alleged BlackBay has refused to pay him the amount he says he is entitled to under the speculative agreement in respect to one matter.
The amendments also sought to raise three additional issues that go to Carroll’s existing defence of “clean hands”, including an allegation that BlackBay’s conduct in obtaining information from his work computer, WhatsApp and Gmail was said to be “covert surveillance”.
Justice Ball said many of the proposed amendments were not responsive to paragraphs in the amended statement of claim.
He also took issue with Carroll’s previous admission of the existence of the employment agreement, particularly because Carroll initiated separate proceedings in the Federal Court to recover entitlements.
Carroll’s amended defence “appears to traverse that admission”.
“Moreover, it is difficult to see how the allegation that BlackBay made pre-contractual misrepresentations is relevant to the existence of the employment agreement, when no relief is sought in relation to that conduct. Whether the employment agreement was repudiated or not is not relevant to the question of whether the parties entered into it,” Justice Ball said.
The allegation that the employment agreement was “tainted” by the side agreement was “unclear”, with Justice Ball commenting that the amended defence did not set out “what consequences are said to follow”.
Justice Ball made a similar observation of the speculative agreement.
As for the clean hands defence, Justice Ball said a necessary condition would be for BlackBay’s own breach to be pleaded properly. Carroll’s amended defence did not make that clear.
“In the present case, Carroll has sued to recover his entitlements under the employment agreement. Either he will be successful or he will not.
“If he is successful, he will be entitled to those entitlements irrespective of whether BlackBay is entitled to the equitable relief it seeks.
“Conversely, if he is unsuccessful, the claim can have no relevance to the question of whether BlackBay is entitled to the relief that it seeks,” Justice Ball said.
Carroll has been ordered to pay costs.
The case: BlackBay Group Pty Ltd t/as BlackBay Lawyers v Carroll [2025] NSWSC 1442.
Naomi Neilson is a senior journalist with a focus on court reporting for Lawyers Weekly.
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